• Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 11/18/2011

China - Tax authorities issue guidance for implementing VAT pilot program in Shanghai; VAT to replace business tax beginning in 2012 

November 18:   The Chinese tax authorities on 17 November 2011 issued circulars* that detail the implementation and transition rules that give effect to a value added tax (VAT) pilot program in Shanghai.  The pilot program will replace the business tax with a VAT in Shanghai, beginning 1 January 2012.

*Caishui [2011] No.110 and No.111, were jointly issued by the Ministry of Finance and the State Administration of Taxation.

While the VAT pilot program is limited to Shanghai and to certain industries only, the implementation and transition rules are viewed by tax professionals as likely serving as a roadmap to the way that VAT reforms could ultimately be implemented across the whole of China.

To read a November 2011 report on the VAT pilot program, prepared by the KPMG member firms in China and Hong Kong: VAT reforms become a reality for 2012 pilot program

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